Report on POWEO Harvard Case Solution & Analysis

Question 1

Risk register is classified into eight categories. The risk register for Poweo as at 31 may 2010 is given below:

Part a

Division 1

Division

 

 

Objectives

 

Risk

 

Priority*

 

Effect of risk

 

Mitigation/StrategyResponsibility

 

Due Date
UpstreamBuilt power generated plantsIncrease in capital cost.

 

 

Low  likelihood & High impact

 

Low rate of returnto reduce the cost of equity an organization should control its debt structurePresident of Poweo 5

Aug 2010

Increase in operating cost.Low likelihood & High impact

 

Losses may be incurredShould control its administrative expenses, marketing and selling expensesFinance Team  of the Poweo18 July 2010
UpstreamBuilt gas processing infrastructureSubsequent release of gas.

 

Low  likelihood & High impact

 

Penalties may be sufferedBy training the technical team of the company.Risk assessment team of the Poweo20 July 2010
Increase in the gas prices.High   likelihood & High impact

 

Low demand of the gasPoweo can book  future contract in order to avoid this increase in gas pricesRisk assessment team of the Poweo16 Aug 2010
UpstreamFocus on the liberalization of the upstream segment of European market.May not be cost effective

 

Low  likelihood & High impactIncrease in the expenditure costPoweo should only target those customer which increase their profitabilityFinance officer of the Poweo2 Nov

2010

Adverse  economic conditions 

High  likelihood & High impact

 

Decrease in the  demandThe company should need to makes important decision like training of the  employees ,innovative marketing strategiesChief risk officer 8 June

2010

UpstreamWork on new energy sourcesHeavy research expenditure

 

High  likelihood & High impactLosses or may result in low profitBy adopting the latest technology in the researchFinance officer of the Poweo 15  Dec 2010
Limited options available 

Low likelihood & High impact

 

Threat of competitorsThe company should  hire new skilled and experienced workers on their salesforceStrategy director of the Poweo15 sept 2010

 

Division 2

Division

 

 

Objectives

 

Risk

 

Priority*

 

Effect of risk

 

Mitigation/StrategyResponsibility

 

Due Date
sourcingMarket poweo’s electricityIntense competition

 

 

 

High likelihood & High impact

 

Decrease in market sharesBy targeting more new customers market segments.President of Poweo14 June

2010

 

 

Limited capacity

Low likelihood & High impact

 

 

 

Reduction in the customer base.Poweo by making new investment in the capital can enhance the capacity.President of Poweo29 June 2010
sourcingResold any surplus in the marketDecrease in the demand

 

 

High likelihood & High impact

 

Decrease in the profit margin.

 

Should target new profitable markets around the world.Chief risk officer 7 June 2010
Fluctuation in the sale prices.High  likelihood & High impact

 

 

May result in the increase in the inflation

In depth analysis of the market condition in order to avoid this risk.Strategy director of the Poweo15  July 2010
sourcingManage the sales and marketing departmentIncrement in the expenditures

 

Low likelihood & Low impact

 

Decrease the           net incomeBy increasing the sales and growing the business by making it more profitable.Strategy director of the Poweo12 July 2010
Misallocation of resourcesLow likelihood & Low impactOutput of power generation declineFocus on the areas of the business that are generating more productivity.Strategy director of the Poweo18 Oct 2010
sourcingSourcing long term contracts for electricity supply.Increase in sourcing costs.

 

High  likelihood & High impactDecline in the  electricity sales of domestic marketPoweo should focus to  increase their production capacity to sever large non-residential customersPresident of Poweo10 Aug 2010
Regulated tariffHigh  likelihood & Low impact

 

 

Negatively impact the  growth of the electricity marketBy supplying the electricity to its customer base at price that built on regulated tariff discount.Risk assessment team of the Poweo25 Sept 2010

 

Division 3

Division

 

 

Objectives

 

Risk

 

Priority*

 

Effect of risk

 

Mitigation/StrategyResponsibility

 

Due Date
CommercialOffer power supply services.Line losses when distant supply

 

Low  likelihood & High impact

 

Leakage of in the structure of electricity supplyBy making high level of investment in the infrastructure.Strategy director of the Poweo 6 Jan 2011
Decrease in market shares

 

 

Low  likelihood & High impact

 

Reduce the poweo profitability & growthBy attracting more new customers market segments internationally.Finance officer of the Poweo16 Aug 2010
CommercialContract with partnersMisunderstanding b/w partnersHigh  likelihood & High impact

 

delay in the beginning of the projectMeeting on the timely basis to discuss the uncertainties that may occur.Strategy director of the Poweo 18 July 2010
Lack of communicationLow  likelihood & Low impact

 

 Conflict may arise trained professionals should contact  with the  dealing partners on regular internalStrategy director of the Poweo25 sept 2010
    CommercialSales to downstreamDecrease in the revenueLow  likelihood & High impact

 

Increase in the liabilityEffective marketing and selling campaignFinance officer of the Poweo 20 Jan 2011
Oil crisisHigh  likelihood & High impact

 

Increase in the oil prices & storage of oilThe company should research for other energy resourcesChief risk officer2 Oct 2010
Commercial

 

 

 

 

 

 

Determining economic feasibilityUncertain policies of Government.

 

High  likelihood & High impact

 

Unable the poweo to enter the new marketsNegotiation with government and keep in constant contact with the government officials  for upcoming  policiesChief risk officer11 July 2010

.................

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